The Coalition government sold one of Sydney’s most prestigious hotels to a Singaporean developer without an open tender despite internal advice a direct sale could breach “ICAC guidelines”.

Former finance minister Greg Pearce oversaw the $16.8 million sale of the Sir Stamford at Circular Quay to a company controlled by billionaire Chio Kiat Ow in July 2013, one year after senior staff at the State Property Authority recommended a public tender process.

The freehold to the Sir Stamford Circular Quay was purchased by the Stamford Land Corporation in 2013.

Mr Pearce was sacked by then premier Barry O'Farrell after an unrelated "jobs for mates" scandal just weeks after the deal was announced and replaced by Transport Minister Andrew Constance who oversaw the settlement of the sale to the Logan Trust.

The Logan Trust — which donated $10,000 to the Liberal Party in July 2011 — is wholly-owned by Mr Ow's Stamford Land Corporation, a major developer in Australia and Singapore.

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Mr Pearce yesterday told the Sydney Morning Herald that it was his recollection “that I was advised the State Property Authority had conducted some form of market testing which satisfied the rules”.

Emails sent by SPA executive director Simon Furness on June 12, 2012 to Mr Pearce’s office warned if a sale “by direct negotiation were contemplated (rather than open offer) we would need to get an express direction from the Minister, as policy, ICAC guidelines etc all point to an open market offer”.

A separate ministerial briefing, prepared by the State Property Authority and obtained by the Herald, raised another option which would allow the company, known as the Logan Trust, to develop the property but leave ownership with the government, raising $10.95 million.

“While Logan clearly has an interest in acquiring the freehold and should theoretically be able to pay a premium, there may be other parties who are prepared to take a very long term view and acquire (ownership after Sir Stamford’s lease ends),” the briefing reads.

“The best way to identify interested parties would be through a public tender process, in which Logan would be free to participate … such a process would also clearly comply with the Independent Commission against Corruption’s Guidelines for Managing Risk in Direct Negotiation.”

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However, the brief notes that because Sir Stamford had a lease on the property for another seven decades, it was likely the value of that deferred ownership would be just $800,000.

A spokesman for Finance Minister Victor Dominello said separate “independent probity advice” had confirmed the negotiation process did not breach ICAC guidelines or probity principles.

Documents produced by the NSW Valuer-General just one year after the sale, however, show the Macquarie Street property had a land value of more than $26 million by July 2014.

By then, the Singapore-listed Stamford Land Corporation had lodged major development plans for the property – once the vaunted Ritz-Carlton – including a proposal for more than 100 units.

Mr Pearce said extensive negotiations had begun before the O’Farrell government came to power in March 2011 and had “proceeded a long way before I was briefed”.

“The developer was seeking consent to convert the hotel to apartments and to extend the lease term … the advice to me was essentially that we had to agree,” he said.

“I was not convinced it would be in the state’s interest to have apartments there for nearly 100 years and to have a department looking after it for that time.”

Mr Pearce was removed as finance minister by then premier Barry O’Farrell three weeks after Stamford Land Corporation announced it had reached an agreement with the government after negotiating on a “willing-buyer and willing-seller basis”.

Government Property NSW confirmed at the end of the financial year that the property had been sold “through direct negotiation between GPNSW (Government Property) and the purchasers”.

No development on the site has commenced, nearly five years after plans were first lodged, with the owners of the neighbouring InterContinental Hotel disputing the proposal.